After Code Share Hitch, Buying American Airlines Stake Still Being Pursued By Qatar Airways

07/13/2017

Even though the U.S. carrier is ending their code-share agreement, Qatar Airways said it will go ahead with plans to buy a stake in American Airlines Inc.

As "an extension of our stance against the illegal subsidies that these carriers receive from their governments", it was cancelling code-share agreements with Qatar Airways and Etihad Airways, American announced on Wednesday. Both Middle East airlines deny they are state subsidized.

Acrimonious dispute between U.S. carriers and Gulf competitors over competitive advantages is expected to ramp up by American's decision to end the agreements which allow airlines to book passengers on each other's flights.

The decision would not affect the Middle East carrier's plans to buy up to a 10 percent stake in American, announced last month but he was disappointed by the decision, Qatar Airways Chief Executive Akbar al-Baker said on Thursday.

"Our stock purchase request and filing is going ahead as normal. We had to clarify certain questions of the regulator, which we compiled with," al-Baker told reporters in Doha.

Seeking clearance to buy up to a 10 percent stake in the U.S. carrier, according to the filing, Qatar Airways sent a revised antitrust filing to U.S. regulators on Wednesday.

Qatar Airways' investment portfolio already has 10 percent of South America's LATAM LAN.SN and 20 percent stake in British Airways-owner International Airlines Group and a stake in American would add to its portfolio.

It was puzzling given the U.S. carrier's very public stance on state support given to Gulf carriers and "We aren't particularly excited about Qatar's outreach", said American Airlines CEO Doug Parker, however, in a letter to his employees last month.

Qatar Airways, Etihad and Emirates to offer lower fares and more amenities to long-haul, international travelers, due to state subsidies, American and other U.S. carriers have charged the Middle East airlines with.

According to government officials and airline executives who have spoken to the White House, the White House is considering the request of the U.S. airliners to curb the Middle Eastern carriers' access to U.S. airports.

Qatar Airways had other partners in the United States "who want to work with us" and American's decision to end the code-share agreement was "not in the spirit of the one world alliance", Al-Baker said.

Members of the one world airline alliance are Qatar Airways, American Airlines, IAG's British Airways, Iberia and LATAM.

Before formally seeking board approval from the U.S. carrier to increase its ownership, Al-Baker had previously said Qatar Airways would buy American shares on the open market.

Advance approval from its board for the purchase of a stake of 4.75 percent or more is required by the U.S. airline's own rules.

A material financial impact for the U.S. carrier would not happen by cancelling code-sharing agreements with Qatar Airways and Etihad, American said on Wednesday.

American has been accused of being “anti-competitive” and “anti-consumer" by Etihad, which flies to six U.S. cities. It has also said that it was disappointed with the decision.

An Etihad spokeswoman said that in order to connect passengers to secondary markets, still being in place would be an interline relationship between Etihad and American, which allows customers from two airlines to buy connecting flights on one ticket.